Every Thing Connected: IoT = The Internet of Transformation

Putting physical objects on a connected network is not a new concept. Putting 50 billion of them on one is.

Consider the emergence of the Consumer Internet. Over the last 20 years, more than 3 billion people have gotten connected via their computers, tablets and smart phones. Now consider the advent of the Industrial Internet, where over the next five years, 50 billion devices — or “things” — will become Internet-enabled and prolific sharers of data.

Welcome to the Internet of Things (IoT).

At its simplest, IoT is about “things” — and by that we mean just about any thing you can think of: a refrigerator, a car, a transformer, a thermostat, a plane, an engine, a motor, a drive, an air conditioner, a security camera — sharing data about its current state (“I am operating within specifications” or “I will need to be fixed soon”) and the environment in which it operates (“There is no one in the building now” or “There is too much fluid in the valve”). This data can be shared directly with control devices, a software program, or a human being to spur immediate action or seed future insight.

And while for some, the Internet of Things may augur a world of machine domination, IoT is less about red-eyed robots pursuing Sarah Connor than it is about a sensor-enabled pipe telling the local Water Authority that there’s a leak under 8th Street.

A logical progression of, and acceleration into, the Information Age, IoT will change how we live and work, manage precious resources, run manufacturing processes, and operate businesses. Just as important, it will create and drive new economic opportunity, with some estimates projecting IoT’s impact on global GDP topping $14 trillion by 2020.

Put a Sensor on It

While IoT is not a completely revolutionary idea, a confluence of factors is occurring now to make it a reality.

First, the number of sensors in use today has grown exponentially, fueled by a precipitous drop in their price and the energy needed to power them. As the cost of sensors has decreased from tens of thousands of dollars to single dollars and even cents, the ability to “put a sensor on it” has paved the way for billions of connected devices to be in use today, with tens of billions more to follow.

Second, connectivity has improved dramatically. The breakthrough communications technology that has driven the personal communications revolution — think of the move from wired to wireless, 1-4G networks and beyond — is making anytime, anywhere data sharing among and by “things” not only possible, but simpler and more seamless than ever.

Third, the volume of data being transferred today is unprecedented. Whereas sensors of decades past transmitted single bits of data, today’s sensors and actuators are generating 100 exabytes of data per month. That’s Big Data.

Fourth, and finally, we can now do analytics on this tremendous volume of data — at speed — thanks in large measure to low-cost cloud-based storage services from Amazon, Google, Microsoft and the like. The success of the IoT-enabled enterprise hinges not on the volume of data that can be generated and accessed, but the speed at which data can be translated into actionable operational intelligence.

In sum, the confluence of the large number of low-cost sensors deployed at scale, the ability to communicate vast amounts of data at scale, and the ability to store this data and analyze it at speed is beginning to bring the vision of IoT to fruition.

Efficiency Today, Transformation Tomorrow

Not surprisingly, IoT’s early proving ground within the enterprise has been in improving operational efficiency, optimizing the tracking, maintenance and performance of assets — directly impacting the bottom line. Leveraging the drivers that have made the technological underpinnings of IoT more affordable and powerful, companies today are on the verge of being able to more effectively monitor all of their assets, not just a small percentage as had been the norm.

Comprehensive asset coverage means every machine in a production process or device in a supply chain can now communicate whether it is performing within spec and when it needs to get fixed, maximizing uptime, productivity and profitability. For a company — say a utility — with millions of assets distributed over hundreds of miles, this ability to proactively know how each one is performing in real time is critical.

Through IoT, a sensor in a meeting room can determine occupancy and tell the building management system to turn off lights and heat/cooling accordingly to save energy. That impact can be further magnified by connecting it with weather information to shape and inform environmental controls for tomorrow’s workday. Applied more globally, IoT can help energy managers look across their portfolio of buildings, accessing real-time and historical data, to yield the highest-returning energy efficiency investments.

In each of these cases, data, transformed into actionable operational intelligence, gives the enterprise the tools it needs to move away from “gut-feel” management to analytics-based decision-making. IoT helps take out the guesswork.

The bottom-line savings here are vast and pervasive. Logistics companies are optimizing delivery routes based on IoT data; manufacturers are running processes more efficiently, training new staff more effectively, and mitigating risk more securely; and commercial property owners and facilities operators are maximizing occupant comfort while minimizing cost.

Attacking enterprise inefficiency through IoT is certainly a great starting point. Yet IoT also poses enormous top-line growth potential. Just as Apple’s iOS platform and App Store unleashed a global revolution in application development and innovation, the prospect of an IoT-led boom presents the same tantalizing possibilities for the Industrial Internet.

The emergence of such IoT platforms would not only spur widespread application and ecosystem development, but also new service-based business models for wide swaths of industry. In such a world, “things” might not be sold as such, but rather for the value or outcome their connectedness provides.